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US Economic and Stock Market Summary
The U.S. economy wrapped up 2024 with steady growth, bolstered by resilient consumer spending and a strong labor market. Inflation continued its downward trend, leading the Federal Reserve to maintain its target interest rate through December, signaling a more cautious approach to future rate changes.
As of this writing, there was still a little trading time left in the year, but overall the U.S. stock market capped off the year with another strong month, as the S&P 500 gained about 3% in December, bringing its annual return to more than 19%. More exact numbers will be available soon, but this appears to be the best 24 months for stocks in the last 25 years.
This performance was supported by solid Q4 earnings reports and improving economic sentiment, though concerns about elevated valuations and potential headwinds remain in focus.
Key economic indicators as we close the year:
- Housing Market: Mortgage rates have continued to edge lower, with the average 30-year fixed mortgage hovering around 6.4%. This remains below the historical average of 8% since 1971, providing some relief to potential homebuyers.
- Job Market: The labor market ended 2024 on a high note, with unemployment rates near historic lows, reflecting continued resilience across industries.
- U.S. Dollar: The dollar maintained its strength against major currencies throughout the year, supported by economic stability and high interest rate differentials.
Looking ahead to 2025, markets are poised for potential shifts, with attention on a new presidential administration, congressional tax policy, Federal Reserve policy, global economic conditions, and corporate earnings trends.
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